Keppel DC REIT expands in Europe, acquires a data centre in Italy for $41.5 million

Keppel DC REITannounced today that it has bought a data centre in Milan, Italy for $41.5 million (S$57.3 million) to further expand its operations in Europe.

The data centre consists of three interconnected four-storey buildings with a total lettable area of about 15,365 square metre (165,389 square feet). It is sited on 11,965 sqm (128,791 sq ft) of freehold land about eight kilometres away from the Milan city centre.

The company, in an SGX announcement said the facility was well connected and easily accessible via the Milan Metro system. This acquisitions marks REIT’s first investment in Italy, and also further expansion in Europe. The acquisition also complements its existing portfolio profile and growth plans.

The facility was acquired from Riaz Valani, Sebastiano Rizzo and Faizul Lalji. DC Reit said the data centre has been fully leased to one of the world’s largest telecommunications companies, on a double-net lease structure for 12 years since January 2016. The lease provides for annual rental escalations and an option to renew for another six years.

The acquisition is expected to be accretive to Keppel DC Reit’s Distribution Per Unit and will enhance its income stream stability through geographical diversification.

the Reit said.

Keppel DC REIT’s portfolio weighted average lease expiry (WALE) will be lengthened from 8.7 years to 9.3 years, while its portion of master-leased facilities will be increased. On completion, Keppel DC Reit’s aggregate leverage is expected to increase to about 32.5 per cent from 29.1 per cent.

Assets under management will increase to approximately S$1.13 billion with aggregate lettable area of approximately 70,912 sqm (763,298 sq ft) across 10 data centers, which is under construction by the vendor in Germany and slated for completion in 2018. The acquisition will be fully funded by debt and is expected to be completed in the third quarter of 2016.